Question

In: Accounting

For each of the following errors, considered individually, indicate whether the error would cause the trial...

For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. If the debit and credit totals would be equal, enter zero ("0") in the amount box.

a. The payment of an insurance premium of $7,450 for a three-year policy was debited to Prepaid Insurance for $7,540 and credited to Cash for $7,450.

The debit and credit totals of the trial balance would be equal.

The debit column on the trial balance would be higher than the credit total.

The credit column on the trial balance would be higher than the debit total.

  A payment of $2,575 on account was debited to Accounts Payable for $1,803 and credited to Cash for $1,803.

Which of the following is true?

The debit and credit totals of the trial balance would be equal.

The debit column on the trial balance would be higher than the credit total.

The credit column on the trial balance would be higher than the debit total.

c. A purchase of supplies on account for $4,220 was debited to Supplies for $4,220 and debited to Accounts Payable for $4,220.

Which of the following is true?

The debit and credit totals of the trial balance would be equal.

The debit column on the trial balance would be higher than the credit total.

The credit column on the trial balance would be higher than the debit total.

Solutions

Expert Solution

a. The payment of an insurance premium of $7,450 for a three-year policy was debited to Prepaid Insurance for $7,540 and credited to Cash for $7,450.

Solution: The debit column on the trial balance would be higher than the credit total. Due to Prepaid Insurance account was debited by $7540 instead of $7450. Hence Prepaid Insurance Account debited more by $ 90.

b. A payment of $2,575 on account was debited to Accounts Payable for $1,803 and credited to Cash for $1,803.

Solution: The debit and credit totals of the trial balance would be equal because wrong amount was posted on both debit and credit Side and net difference will be "0" in such Case.

Now, it's require to rectify the mistake with correct amount on both Debit and credit side.

c. A purchase of supplies on account for $4,220 was debited to Supplies for $4,220 and debited to Accounts Payable for $4,220.

Solution: The debit and credit totals of the trial balance would be equal and net difference will be "0" in such Case.

ekkarill92 answered 1 year ago
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